If you have kids (or were a kid when it came out), I'm sure you've seen the Pixar classic "Finding Nemo". In that film, Marlin, Nemo's father, is teaching Nemo how you leave the anemone in which they live. First you go out and look, then you come back in, then out, then in, then out, then in, and if you want to do it a fourth time that's ok too (apologies to to Pixar for my paraphrasing). The currency markets often do the same thing and the current EUR/GBP trade is a perfect example (another example is the AUD/USD trade last week). When a pair is about to break out and make a move, it often practices a few times before it gets it right. Sometimes it even gives you a head fake in the wrong direction. If you want to trade break outs successfully, you've got to be prepared to get misled a time or two in order to get the benefit of the big move. For example, in the EUR/GBP trade I am currently in (see yesterday's Trade Idea), the pair gave us a head fake lower before busting out higher. Now I did enter on the lower break out and as a consequence lost 33 pips on that trade. However, when it broke north I got in again (when it broke the upper channel boundary) and that trade is currently up about 75 pips and is still going (I've locked in 40 pips so I'm going to be at least net positive for this idea). The point is you've got to be flexible when trading the Forex and be ready to admit that you were juked so you can get on board when the pair moves. In this case (and the last one) that flexibility turned what would have been a losing trade into a winner.
Happy Trading!
Happy Trading!
